Bank of America raises dividend after clearing Fed's stress test

July 1 (Reuters) - Bank of America BAC.N hiked its quarterly dividend to 28 cents per share on Tuesday, less than a week after passing the U.S. Federal Reserve's annual stress test.

The new dividend will be paid beginning in the third quarter. The bank's previous dividend was 26 cents per share.

The biggest U.S. lenders have enough capital to withstand a hypothetical severe economic and market turmoil, the Fed said last week. The aggregate decline in banks' common equity tier 1 ratio, a gauge of high-quality capital, was milder this year compared to 2024.

While the clean bill of health may prompt banks to reduce excess capital via buybacks and dividends, they would likely be cautious until the economic outlook becomes clearer, a Moody's report said on Tuesday.